- Paying a deposit will reduce the amount you are borrowing. This has a two-fold effect. Firstly it will show the finance company that you are able to save. A customer who is able to save, generally is able to reliably make repayments. Secondly it reduces the amount you need to borrow. This means that the value of the security (the car) is worth more than the loan which lowers the risk to the lender. In turn this could reduce the finance rate you are charged.
- Consider a shorter term. If you can make it fit your budget, take the option of a shorter term. There will be options to repay your car loan for terms up to 7 years. In all cases a longer term will result in lower weekly repayments, however, it will also always result in higher overall interest. The difference between a 3 year loan and a 7 year loan could be thousands of dollars. If you cannot afford the short term loan initially, but feel that your situation may change in the future, ask about the options and costs involved in changing the term at a later date.
- Protect your asset and your loan. While it will be part of the terms and conditions of your new vehicle loan that you fully insure your vehicle, you should also consider protecting the loan repayments from unforeseen events. Payment Protection Insurance and GAP Cover are both options available to all borrowers. The finance company will be happy to allow for these to be included in your new loan as they offer protection. Speak to our business manager to find out what options will be best for your situation.
- Keep up with the agreed repayments. However, if for unforeseen circumstances you are unable to meet your repayment the best thing to do is get in touch with the finance company. In most cases, they will be more than happy to make an arrangement with you to catch up a repayment. By keeping in touch and making an arrangement you will avoid penalty fees and additional interest charges.
- Don't apply for finance at several places to try to get the 'best deal'. By doing this you may reduce your chance of getting finance approved, or you may end up being given a higher finance rate when you finally do end up settling with a company. Every time you apply for finance you are giving permission to have credit checks done on you. Several credit checks done in a short space of time will decrease your credit score. A low credit score means you are a higher risk, which results in a higher finance rate.
If you have any questions or would like to apply, you contact our Business Manager today HERE, and they will be happy to guide you through your application.